Design & Behavior

What is “Design & Behavior”?

Economic engineering is the science of designing real-world institutions and mechanisms that align individual incentives and behavior with the underlying goals. Mechanisms matter because they affect incentives, and decision makers respond to incentives. They do not always do so in a rational or selfish way, though; yet behavior often responds in a systematic way.

This is the starting point of our research in “Design & Behavior”, where we identify, model and investigate behavioral complexities that are relevant for a broader range of ‘real-world’ contexts, and develop mechanisms (often based on game theory) for specific contexts that can be proven to be robust against such behavioral complexities. Applications include spectrum and security auctions, energy markets, financial markets, emission trading rules and climate negotiation design, procurement and supply chain contracts, worker compensation schemes, matching and online markets.

Research on Design and Behavior is exciting and important. One reason is that the way we design institutions affect prices of electricity and telecommunication services, satisfaction at work, the degree of trust in markets, and the success of individuals, societies and politics. Another reason is that dealing with real world challenges allows us to build better models of human behavior, markets and firms.

“Design & Behavior” and “Behavioral Management Science” aim at sustaining a strong momentum in interdisciplinary research activities, building up state-of-the-art laboratory infrastructure, strengthening regional research collaborations and international networks, and offering a complementary teaching programs from Bachelor to PhD studies.